McDonald's woos cash-strapped customers

McDonald's hopes to boost sales by expanding its options for value-conscious customers, including a new "Extra Value Menu."

Kai Ryssdal: From the drive-thru window at McDonald's comes this glimpse into the personal finances of recession and what it means for businesses. The burger chain reported February sales this morning. They were up, but not as much as the experts had been guessing. Blame a still-weak economy and people still looking for bargains.

So the omnipresent fast food king is gonna try to focus our attention on its low prices to get more of us in the door. The dollar menu's not enough, it seems. Next month, the Extra Value Menu arrives.

Sally Herships explains.


Sally Herships: For restaurant lovers, the following news is about as welcome as stale, soggy cold French fries.

Darren Tristano: With higher gas prices and lower disposable income, it’s becoming increasingly difficult for Americans to dine out.

Darren Tristano is a food industry consultant with Technomic. Sad news for diners, but Tristano says it does solve a minor menu mystery. Normally we expect menus to be organized by type of dish, like appetizers, entrees and desserts. But not McDonald’s new Extra Value Menu. It will include everything from coffee to McNuggets.

Tristano: So they’re trying to focus the menu based more along the lines of price versus types of products.

And remember McDonald’s already has a dollar menu and value meals. Tristano says the restaurant is adding another value based option because consumers are changing. We used to be embarrassed to use coupons in front of our friends. But he says the recession did away with that.

RJ Hottovy: Customers' fixation on the word "value" right now is important.

RJ Hottovy is senior restaurant analyst at Morningstar. He says as upscale newcomers like Panera and Chipotle are opening their doors, the fast food industry is declining. If McDonald's wants new customers, it’ll have to steal them away from its competitors, which are also discounting. So, Hottovy says, it’s critical that the fast food king lets hungry customers know it’s offering low-priced options like McNuggets.

Hottovy: These are also are also pretty high-margin products, things that help drive the bottom line.

The new menu is available beginning March 26th.

In New York, I’m Sally Herships for Marketplace.

About the author

Sally Herships is a regular contributor to Marketplace.

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